Dear Hyosung family members, hello!
The time stole by and it is already December when we finish this year and prepare for the next year. Dear employees, I want all of you to do your best to accomplish the goals until the last minute and bear fruitful results.
After the Cold War, as the WTO regime has been accelerated, world has achieved bright economic development for the past 30 years through open-market and trade expansion. Free trade agreements breaking barriers between nations were made, and efforts for regional economic integration were actively given with EU at the head of the trend. Consequently, world trade has substantially risen from 30% occupation of the global GDP to 60%, and the global capital flow has increased exponentially, and also human interchange has increased greatly.
However, this big trend seems to abruptly change recently. In the last June when the British people passed Brexit through the referendum, such views trying to limit the meaning to UK's own internal matter still prevailed. However, when the result of the US Presidential Election came out, many people were shocked and finally began to ponder seriously over the issue of anti-globalization.
Anti-globalization has come forward in the midst of long-term stagnation of global economy, as income inequality is getting deepened and decent jobs are getting harder to get. A substantial portion of people living in advanced nations attribute the economic stagnation and lack of jobs to trade deficit and influx of foreign labor, and accordingly trends of the economic nationalism giving top priority to each nation's advantages, such as immigration control policy and protectionism, are being spread.
The '200 Day Trade Plan', which lays out the early stage trade policy after the President-elect Trump takes office, makes us conjecture even slightly on how world economy may change in the future. According to the Plan, US will seek re-negotiation or withdrawal of the free trade agreements which are being implemented or talked about, such as NAFTA and TPP, and will examine imposing retaliative tariffs up to 40% on China and Mexico. US will also take strong actions against infringement of intellectual property rights. This trend is not limited to US. Just as China recently raised the certification standards for the electric car batteries significantly to try to keep hold Korean batteries, many countries are in the trend of strengthening anti-dumping policy or non-tariff barriers, and political conflicts between world powers or regional hegemonism is becoming another factor to discourage world trade. If situations like this continue, I am afraid that Korea which has maintained the trade-based growth & development model will get a big damage.
From the perspective of a company, the anti-globalization trend will justify further the appropriateness of seeking more aggressive globalization. It is necessary to advance into nations with large demands and raise the proportion of production and sales there, and to examine closely and respond to the system, law, and consumer needs of those places. That is why it is very important for local divisions to strengthen their organization and capability so as to be able to settle as local companies in each nation. It is also necessary to secure such outstanding quality and innovative technology as to be able to have advantages in the global competition which will be more intense in the future. Particularly for such companies producing parts and materials as our company, the capability to satisfy different requirements of the diverse customers from all over the world is definitely required.
In this sense, the new year will be a really busy year. I want you to complete this year smoothly, taking this time as a chance to carefully observe change of business environment and solidify your determination for new challenges.
Written by | Vice Chairman Lee Sang-woon